VAST Data has just completed an $83-million Series D financing, but the New York City-based data storage company with customers in life sciences and other verticals said it had no immediate plans to spend the capital it just raised.
That cash will stay on VAST’s balance sheet, along with the $100 million Series C financing completed last year, weeks after the pandemic emerged, as well as the $40-million Series B round the company raised in 2019.
“We don’t really need the money,” VAST CEO and co-founder Renen Hallak candidly told GEN Edge. “We’re looking more to signal to the market, to our customers, and to our partners that we’re here to stay, that we’re here to serve them forever.”
VAST doesn’t need the funds immediately because it achieved positive cash flow in only its second year in business last year, as well as a nearly $100-million annualized software run rate, after quadrupling its software business year-over-year.
“We’re now no longer burning cash and we have $230 million on our balance sheet,” Hallak said. “Things have been going very well over the last few years. But in case we hit a bump in the road, we have that shock absorber, which lets me sleep well at night.”
The latest financing also more than tripled VAST’s valuation, to $3.7 billion, a feat the company says is also good news for its customers.
“At $3.7 billion, we’re now worth more than many of the household-name brand storage and cloud infrastructure products that VAST competes with—and this provides customers with a certain level of positive assurance that VAST is now playing at an equal (or even superior) level to the established legacy players,” Jeff Denworth, VAST chief marketing officer and co-founder, wrote on the company’s blog.
Denworth, Hallak, and Shachar Fienblit, vp of R&D, co-founded VAST Data in 2016. The company began shipping its first general-availability product in 2018, and formally launched the following year.
Broad, NIH among life science customers
Among customers that have signed up for Gemini is the Broad Institute of MIT and Harvard, for which VAST manages data storage. “They don’t need to worry about managing their storage anymore. We do everything for them,” Hallak said.
For life science users, VAST’s storage systems are designed to enable bioinformatics applications at any scale to benefit from the speed, input-output (I/O) consistency, and simplicity of all-flash parallel file system storage. As a solution provider for Intel Select Solutions for Genomics Analytics, VAST offers genomics analytics customers the ability to replicate the Broad’s Genome Analysis ToolKit (GATK) best practices workflows and create their own pipelines using Cromwell Workflow Definition Language (WDL) scripts that are part of the solution.
The company’s systems eliminate the tiering of data across a complex, pyramidal hierarchy of storage systems, each focused on either fast I/O or large capacity, and replacing it with a single system designed to be as fast as, or faster than, a tier one, all-flash system today, and as cost effective, so that all of a customer’s life science research data can be retrievable on one fast tier of flash.
“Hardware refreshes are a chronic headache for any IT department as any downtime can have a negative impact on business operations,” stated Bill Mayo, the Broad Institute’s CIO. What we look for are solutions that have the flexibility to scale performance and capacity so we can quickly adjust to the needs of our organization.”
Eric Burgener, research vice president, infrastructure systems, platforms, and technologies with market research firm International Data Corp. (IDC), said life sciences is among verticals where customers will find Gemini’s hardware and payment flexibility to be attractive. Smaller customers who don’t need a petabyte of capacity to start with can get into a Universal Storage platform at a lower cost, while Gemini benefits VAST by broadening the types of customers the company can sell to.
“VAST’s architecture is great for big data and analytics workloads that are so common in life sciences—genome sequencing, drug development, etc.,” Burgener said. “VAST already offered many advantages in terms of performance and cost over more traditional alternatives that were used for those types of applications in life sciences, and Gemini just makes VAST even more attractive.”
Building life sciences
One of the keys to VAST’s success has been building its life sciences business, which Hallak said accounts for between a quarter to a third of revenues, and between a third and a half of the total customer base.
VAST’s first life sciences customer was synthetic biology pioneer Ginkgo Bioworks, which said Tuesday it plans to go public through a $17.5 billion SPAC deal. Today, VAST’s life sciences customers, Hallak said, consist of “four or five” NIH institutes and multiple companies and private-sector institutions specializing in life science research—including Boston Children’s Hospital and other entities affiliated with Harvard Medical School, including the Athinoula A. Martinos Center for Biomedical Imaging at Massachusetts General Hospital, which is also affiliated with MIT, itself a VAST customer.
Martinos was among early customers of VAST’s LightSpeed platform, which the center adopted as part of a strategic shift to all-flash Universal Storage designed to help accelerate image analysis across a torrent of MRI and PET scan data, while simultaneously eliminating challenges faced by hard drive-based storage systems of maintaining high “uptime” or percentage of time a computer is available and operational.
The NIH is among federal agencies that have completed deals totaling more than $25 million with VAST. Other government agency customers disclosed by the company include NASA, and the National Oceanic and Atmospheric Administration
About 40% of that $25 million in deals came from a single transaction announced last January, when an undisclosed government agency had committed to spend over $10 million towards consolidating its data analytics infrastructure through VAST’s Universal Storage into a single, flash-based storage system designed to support the needs of grand-challenge data science. The agency is using VAST’s technology to unlock insights hidden within vast reserves of biological, population, and health data, the company said at the time.
“I would say probably more than half of our federal deals today are life-science related,” Hallak said.
Life science activity was a key driver of VAST’s decision last month to launch a new subsidiary focused on supporting government and defense organizations. The company named a team to run VAST Federal Data, led by subsidiary president James Dean, formerly sales director of national programs at Cohesity. Joining him at VAST Federal were Randy Hayes, vice president of public sector, who was promoted from director of sales at VAST; and Steve Valimaki, secretary, who was previously the company’s senior systems engineer.
For government and private-sector customers, VAST says it plans to grow its life sciences business in the coming years through its new Gemini software consumption model, introduced last month. Through Gemini, VAST can sell managed software on hardware that customers buy at cost as integrated appliances shipped directly from their manufacturer.
By disaggregating hardware and software, VAST says, it has given customers the best of both worlds: the flexibility and cost advantage of a software-defined business model combined with the simple, multigenerational cluster appliance model that according to VAST has drawn customers to the company.
“We let our customers purchase as if they were a cloud provider. They buy the hardware at cost. It doesn’t flow through our books, and we facilitate that purchase if they’d like us to,” Hallak explained.
As for the software, customers purchase a subscription from VAST based on the capacity that they seek. The company’s average deal size is between $1–2 million, with subscriptions ranging from hundreds of thousands to double-digit millions.
“Most of our customers today are in the high single-digit to low double-digit petabytes; that would be the average,” Hallak said. “We do have customers all the way up to 100 petabytes, and they’re growing very quickly.”
For life science customers, Gemini enables VAST to offer data storage capacity options smaller than a 1-petabyte minimum—starting at 100 terabytes and up, a capacity more tailored to the needs of many research institutions and biopharma customers, Hallak said.
“The customer can now buy that hardware at cost and license less than a petabyte from us to start, and grow as they need, to which is a lot more flexible for them and gives us the ability to serve them in ways that we couldn’t before.”
VAST specializes in large-scale storage systems designed to render the hard drive and storage tiering obsolete by making flash infrastructure affordable for all classes of data. The company has developed an all-flash data storage platform, the world’s first to use quad-level cell optimized flash architecture.
After launching a fifth major feature release for its Universal Storage system, called Version 3.0, VAST unveiled a next-generation storage platform called LightSpeed, which combines VAST’s Disaggregated, Shared Everything (DASE) storage architecture with NVIDIA® GPUDirect® Storage (GDS), last September.
VAST views its main competitors as public giants such as Amazon World Services, Google Cloud, Hewlett Packard Enterprise (HPE, which spun out of Hewlett Packard in 2015), IBM Spectrum Scale, Microsoft Azure, and Dell EMC—the latter an early strategic investor in VAST—though its rivals also include smaller public companies NetApp and Pure Storage, as well as privately-held DataDirect Networks (DDN) and NexGen Storage.
Appliance to software
Burgener said Gemini signals a shift in VAST’s consumption model to software-only from the combined software-plus-hardware “appliance” that resulted from VAST’s software defined storage (SDS) product being preinstalled on certain x86 servers.
“Like most appliance vendors, VAST had heard from some potential customers that they wanted more flexibility in what kind of x86 servers they run it on. VAST wanted to better cater to both of these audiences even as they as a company moved to reap the benefits of becoming a software only supplier,” Burgener told GEN Edge.
He said while VAST’s “hyperscaler” competitors—tech behemoths like Amazon and Microsoft—buy x86 hardware at huge discounts directly from original equipment manufacturers (OEMs) of servers because of the volumes they purchase, many smaller enterprises, including most of VAST’s customers, cannot buy x86 hardware at such large discounts.
“With Gemini, VAST wanted to structure their go-to-market strategy, from their customers’ point of view, to be able to let even small customers buy x86 hardware for use with VAST software at much lower discounts, but not quite as low as what the hyperscalers can get,” Burgener said. “Basically, VAST has moved to a software-only sales model and has struck deals with certain server OEMs that would let their customers buy storage servers for deployment in VAST configurations directly from the server OEMs without the typical markup added by storage appliance vendors.”
VAST tells customers what x86 servers are qualified for use with their software, which according to Burgener gives customers a lot more choice about what x86 servers they can use than under the appliance business model.
In addition to more hardware choice, he explained, Gemini lets customers pay less for hardware, while still allowing them to buy its storage product as an appliance if they want. As they upgrade to newer x86 storage servers over time, customers can span hardware generations without having to relicense the software, extending the storage lifecycle considerably at a cost savings.
“To VAST, the move to a much simpler model that will probably ultimately generate more profit for them as a vendor—they don’t have to pay to support hardware—and delivers a much more predictable revenue stream being subscription based,” Burgener added.
VAST is planning to double its workforce, which has grown this year from 200 to about 230 people, with plans to reach up to 400 people by January 2022. A significant portion of that expansion will be at its R&D center in Tel Aviv, which is projected to grow from about 120 people at present to more than 200.
“We’re big believers in the two big pillars of the company—R&D on the one hand and sales on the other,” Hallak said.
The sales force is set to quadruple this year from eight to 32 two-person teams—a sales rep and a more technically-focused “sales engineer”—and has already begun expanding outside the United States. “We now have three teams in the U.K., a team in Germany, a team in France, a team in Australia. We’re hiring into South Korea and other areas in EMEA [Europe-Middle East-Africa] and Asia-Pacific.”
The new teams will face the challenge of building on some triple-digit growth numbers VAST achieved last year—including a 290% year-over-year jump in software bookings, and a 328% jump in net revenue expansion from existing customers—two of several numbers that drew investors to VAST’s latest financing.
Tiger Global Management led the Series D and was the round’s only new investor. Existing investors included NVIDIA, which combined its tech with VAST’s to create a new joint reference architecture unveiled in January.
The architecture is designed to deliver more than 140GB/s of throughput for both GPU-intensive and storage-intensive AI workloads, significantly increasing storage performance for applications such as large-scale training of conversational AI models and petabyte-scale data analytics. The reference architecture consists of VAST’s LightSpeed platform with four NVIDIA DGX™ A100 systems, plus two NVIDIA® switches, Mellanox Quantum™ InfiniBand, and NVIDIA Mellanox Spectrum Ethernet.
“The plan as of right now is that the business will fund both our growth and we’re growing very, very quickly on the sales side and on the marketing side and product management and support, in order to support a growing customer base as well as innovation,” Hallak said. “We have a lot of new ideas that we’re working on in R&D, which will hopefully come to market over the next few years.”